Sharon J. Riley, The Narwhal

The Alberta government paid more than $30 million on behalf of delinquent oil and gas companies in 2024, The Narwhal has learned. The companies failed to pay rent owed to landowners for the use of their property for oil and gas activities.

This represents a 4,500 per cent increase in the amount of money the government is paying for these missed payments since 2010.

Companies are required to pay rents to landowners for oil and gas activity, whether to drill a well or install another related facility. When they don’t pay, landowners can apply to a tribunal to have those rents paid for by the province.

The payout is supposed to be a stopgap to make sure landowners aren’t out of pocket, with the government going after delinquent oil and gas companies to get them to repay the money.

In reality, that rarely happens.

Data obtained via a freedom of information request show just $167,000 — less than half a per cent of the total paid out in 2024 — was recovered from oil and gas companies.

“The bottom line is … these companies don’t have any money,” Shaun Fluker, a law professor and executive director of the Public Interest Law Clinic at the University of Calgary, said in an interview. “The money has been pulled out of the ground,” he said, explaining that many of these sites are older and produce very little in the way of oil or gas.

“The Crown is not going to recover these funds,” he added.

The total paid by the government on behalf of delinquent companies since 2010 is nearly $150 million, according to data from the province’s Land and Property Rights Tribunal, an independent, non-partisan tribunal that handles landowner claims for land rent. The annual figure has risen almost every year since 2010.

“This number is rising fast now,“ Fluker said. “We can now see in the distance (that we’ll reach) half a billion dollars paid by the government — and up we go.”

When asked by The Narwhal about whether the data indicated an issue with the system, Mike Hartfield, executive director of the Land and Property Rights Tribunal, said by email, “That’s a question best answered by Albertans. The tribunal is focused on doing what it’s here to do — making fair and timely decisions for Albertans following the legislated process set out in the Surface Rights Act.”

A spokesperson for the Ministry of Environment and Protected Areas did not respond to emailed questions from The Narwhal.

Landowners can’t deny oil and gas companies access to their land, so the government promises compensation

There are currently more than 150,000 inactive and marginal oil and gas wells across Alberta. Inactive wells have not produced any oil or gas for months (or years). Marginal wells have a very low production. Taken together, they make up more than a third of all the wells in Alberta.

“There’s a huge number of so-called marginal sites out there that are inactive, but they haven’t been designated as such,” Fluker said. “The company’s not insolvent, but it’s just simply not doing anything with the facilities.”

Landowners bear the burden of oil and gas activity on their land, including disturbances to agricultural crops. Weeds, spills, leaks and soil compaction as a result of the wells can also cause issues.

Land rent — also referred to as surface lease payments — is a critical way farmers and landowners are compensated for the loss of their land when it is occupied by oil and gas infrastructure. Ultimately, landowners do not have the power to refuse an oil and gas company access to their land.

As part of this arrangement, when an oil and gas company cannot — or will not — make its land rental payments, landowners can apply to the Alberta government to have the government pay rent on the company’s behalf.

Once a landowner’s claim is verified by the tribunal, the minister of environment and protected areas issues payments to landowners from the government’s general revenue stream. The government is then supposed to try to recoup that amount from companies.

The tribunal itself has no ability to enforce repayment at that point. It can, however, terminate access rights for companies, which Hartfield noted “can serve as a strong incentive for operators to pay.”

Fluker says the issue of unpaid land rents is “intertwined” with a number of issues when it comes to the liabilities of oil and gas companies, including an inability or unwillingness to cover the cost to clean up an old well, as well as outstanding municipal property taxes.

Unpaid land rent is in addition to unpaid municipal taxes

Land rents aren’t the only way oil and gas companies are costing individual landowners and small communities — many also owe unpaid property taxes to rural municipalities. In March, Rural Municipalities of Alberta announced that its members, made up of rural counties and municipal districts across the province, faced $68 million in unpaid taxes from oil and gas companies in 2024 alone.

In the seven years the organization has been tracking the issue, at least $253.9 million of municipal property taxes have gone unpaid by oil and gas companies.

“The problem continues to worsen,” Kara Westerlund, president of Rural Municipalities of Alberta, said in a statement at the time.

“Oil and gas companies are willfully avoiding their property tax responsibilities. Yet, year after year, this issue persists due to a lack of proper industry regulation and accountability.”

Tribunal working to reduce wait times in the face of ‘exceptionally high’ landowner requests

In response to questions sent via email, Hartfield said the tribunal did not analyze trends in amounts paid out, but did note increased awareness around the compensation process, which he said was in part the result of increased engagement efforts.

Hartfield noted the tribunal has been involved in community information sessions — along with the Alberta Energy Regulator, Orphan Well Association and the Farmers’ Advocate Office — in the Alberta communities of Vegreville, Lac Ste. Anne, Delia, Stettler, Consort and Wheatland County, with more planned in the months ahead.

He also noted “advancements in technology, streamlined processes and red-tape reduction” mean the tribunal is “better equipped to manage high application volumes and continue reducing decision timelines.”

“The result speaks for itself: back in 2022-23 decision timelines on these applications took as long as 12 months, whereas today we’re down to five months,” he added.

Still, Hartfield said the tribunal expects the total number of requests next year to be “similar.”

He added the tribunal has adapted “to handle exceptionally high volumes of applications — over 35,000 under the Surface Rights Act since 2016.”

‘Trying to squeeze whatever extra economic juice’ is left in wells

The Alberta government is currently developing what it is calling the Mature Assets Strategy, which “aims to maximize value and optimize resource recovery from mature oil and gas assets while effectively managing the closure of inactive sites.” Critics say this means the government is trying to prolong the life of old oil and gas wells.

“This government is interested in trying to squeeze whatever extra economic juice there is to squeeze out of these assets,” Fluker said.

But, he added, the approach so far has not dealt with the root causes of the unpaid rents and taxes problem.

“The unpaid surface lease issue is sort of like the bubbles percolating to the surface,” he said.

“When marginal sites become even less economic than they were, companies stop paying: they stop paying the landowner, stop paying the contractors, they stop paying the property taxes,” he said. “And these are the things that percolate up.”

— With files from Drew Anderson

This story is available for use by Canadian Press clients through an agreement with The Narwhal. It was originally published in The Narwhal, a non-profit online magazine that publishes in-depth journalism about the natural world in Canada. Sign up for weekly updates at thenarwhal.ca/newsletter.

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